Internal determinants of college faculty salary levels are discussed. It is argued that the task of maintaining faculty compensation at an adequate level is affected considerably by the nature of the faculty personnel systems, particularly the system of faculty rank and its relationship to pay. The basic dilemma lies in the way the faculty is structured and in the relationship of that structure to salary costs. Salaries at colleges and universities cannot be explained or controlled by the concept of position. Individuals typically double their salary and their cost to the institution while occupying the same position and carrying out the same primary duties. Colleges depend heavily upon turnover savings to fund salary increases for continuing faculty. However, major turnover savings cannot be induced because the majority of faculty are tenured. The relative salaries of individuals and much of the eventual total costs of the institution are determined far more by decentralized reviews and recommendations than by centralized control of costs. Fringe benefits and increases in the mandatory retirement age, account for almost half of the loss of real earnings reported for 1967-1981. It is also suggested that American higher education pays a sizeable price for its entrepreneurial and expansionist tendencies, and for its failure to present a convincing case for the economic advancement of the profession. (SW)